Suppose that economic policy makers want to increase real gdp by $100 with as little impact on the budget balance as possible. should they increase government purchases of goods and services, increase transfer payments, or decrease taxes? suppose the economy is in short-run equilibrium. use the ad–as model to predict short-run changes to real gdp and the aggregate price level if commodity prices suddenly increase. explain your reasoning.

Which of the following statements is correct? stockholders should generally be happier than bondholders to have managers invest in risky projects with high potential returns as opposed to safe projects with lower expected returns. potential conflicts between stockholders and bondholders are increased if a firm's bonds are convertible into its common stock. takeovers are most likely to be attempted if the target firm’s stock price is above its intrinsic value. one advantage of operating a business as a corporation is that stockholders can deduct their pro rata share of the taxes the firm pays, thereby eliminating the double taxation investors would face in a partnership.